LONDON, Jan 6 (Reuters) - British store chains raised their prices more quickly last month and they might struggle to avoid further increases in 2026 due to higher costs, the British Retail Consortium said on Tuesday.

Annual shop price inflation rose to 0.7% in December, slightly above the 0.6% increase in the 12 months to November but in line with its three-month average, the BRC said.

Food inflation of 3.3% in annual terms last month was up from 3.0% in November but prices for non-food items fell by 0.6%, the same pace of decline as in the previous month.

"This year, retailers will continue to do all they can to keep prices down," BRC Chief Executive Helen Dickinson said.

"While falling energy prices and improved crop supply should help ease some cost pressures, increased public policy costs and regulation will likely keep inflation sticky."

Britain's minimum wage is set to increase by 4.1% in April to 12.71 pounds ($17) an hour, adding to employers' higher staff costs which were also pushed up by finance minister Rachel Reeves' first budget in October 2024.

The Bank of England is monitoring food prices closely as it believes they play a role in shaping public inflation expectations. Britain's overall consumer price inflation rate fell to 3.2% in November.

($1 = 0.7412 pounds)

(Reporting by Suban AbdullaEditing by William Schomberg)